Jose Vallejo erected his mill at the mouth of Niles Canyon in 1853. He added a residence for the mill workers, a home for the ranch foreman and a large warehouse. Farmers brought their grain to be ground in Vallejo's Mills. Some came long distances and had to stay overnight to wait for their grain to be ground. Rooms, cafes and bars were built to meet their needs. Charles Shinn described the village in 1856 as "a store or two, a few shanties and saloons, and a sort of hotel." Only the beautiful location by the creek and the picturesque mills would have redeemed it from contempt.

William Incell had a country store in the front part of his house. William Jordan operated a saloon and a hotel. Thomas Scott rented five acres from Vallejo and built a combination store and home. Torrents of water rushed down the canyon and flooded the lower part of the village in the spring of 1862.

The Western Pacific Railroad secured a right-of-way up Niles Canyon in 1865 and brought 500 Chinese workers to prepare the road for the rails. They built warehouses, stables, storage sheds and shanties for the workers; Vallejo Mills became a small railroad town.

A business directory listed the Vallejo and Co. flour mills and the stores of William Incell and Thomas Scott in 1867. William Jordan was operating his hotel and had become the agent for Bamber and Co.'s Express. Thomas Roberson and H. F. Thompson were listed as stone cutters. A fire in July 1868 destroyed Jordan's hotel. The first through trains steamed past the village in 1869 and on to Oakland. The town of Vallejo Mill was surveyed by Plutarco Vallejo in November showing 18 lots on the east side of Vallejo Street and 22 on the west side. Litigation surrounding ownership of the property continued.

Spring Valley Water Co. bought the mills and the village property and leased the land to tenants for $2 a month per lot. A bridge was built over Alameda Creek at the foot of old Vallejo Street in 1872. Travelers on the old mission road could now cross the creek even when it was too high to ford. Wagon traffic on Vallejo Street increased.

Residents started a Sunday school in the old adobe mill and held a ball in the warehouse to raise money to build a school. More families settled in the area creating the need for a larger school. A new two-story building was opened in 1889 and the old building was moved up the street to become the Congregational Church.

The Western Pacific Railroad bought 200 acres west of the county road, built a depot and laid out a new town they named "Niles." Some people re-located to the new town and a few even moved their houses there. When the community's business section moved "across the tracks," the area along Vallejo Street became the historic part of town known as "Old Town".

The City of San Francisco acquired title to Old Town in 1930 when the city purchased the properties of the Spring Valley Water Company. Eleven acres along Vallejo Street were on the border of the Spring Valley Water Company's watershed along Alameda Creek. The S.F. Board of Supervisors ordered the city's water department to sell all lands not needed in 1951; Old Town was slated for auction, and it's residents panicked. Some of the headlines of the local papers read "Picturesque Niles Old Town clouded by eviction threat" and "25 families in Niles await property auction."

Many families threatened by eviction had lived there over 30 years, some for three generations. They had built houses on land they did not own. Some of the houses were comfortable residences and some were tiny cottages, but all were family homes.

Old Town residents were tenants who had been paying low rental fees for use of the land where their homes stood. The men worked for the railroad, California Nursery or the salt plant, and some of the ladies worked at the cannery. Most of the families had been represented in the armed forces in World War II, and many still had sons in the Korean War.

Raymond Andrade, a former Marine corporal, recently returned from Okinawa, assumed the role of negotiator and spokesman for the residents. He canvassed the tenants to see if they could raise enough money for pooling and bidding on the property. Andrade was the first Niles veteran to arrange a State Veteran's Welfare Board loan. He was guarding the interests of his parents, Mr. and Mrs. Marcus Andrade who had lived many years in Old Town. With Andrade's help, the residents had hopes of keeping their homes by the crumbling ruins of Don Vallejo's old mill.

Five years later, an arrangement was worked out so the home owners could buy their houses in separate auctions. One headline read "Old Town Sings Jubilant Chorus as Homes Saved". This original, historic part of Niles continued to be known as the Old Town for a number of years, but many modern residents are not aware of its historic importance.